Chapter 6 Quiz

when a tax is placed on the buyers of lemonade, a. the burden of the tax will be shared by the buyers and the sellers, but the diversion of the burden is not always equal b. the sellers beat the entire burden of the tax c. the buyers bear the entire burden of the tax d. the burden of the tax will be always equally divided between the buyers and the sellers

a. the burden of the tax will be shared by the buyers and the sellers, but the diversion of the burden is not always equal

a floor is binding when it is set a. above the equilibrium price, causing a shortage b. above the equilibrium price, causing a surplus c. below the equilibrium price, causing a shortage d. below the equilibrium price, causing a surplus

b. above the equilibrium price, causing a surplus

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. Harpo, who is one of your advisors, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Chico, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Zeppo, a third advisor, says that the best way to avoid a shortage of oranges is to take no action at all. Which of your three advisors is most likely to have studied economics? a. harpo b. chico c. zeppo d. apparently, all 3 advisors have studied economics, but their views on positive economics are different

c. zeppo

when a tax is placed on the sellers of the lemonade, a. the sellers beat the entire burden of the tax b. the buyers bear the entire burden of the tax c. the burden of the tax will be always equally divided between the buyers and the sellers d. the burden of the tax will be shared by the buyers and the sellers, but the diversion of the burden is not always equal

d. the burden of the tax will be shared by the buyers and the sellers, but the diversion of the burden is not always equal

If a price ceiling is not binding, then a. there will be a surplus in the market b. there will be a shortage in the market c. the market will be less efficient than it would be without price ceiling d. there will be no effect on the market price or quantity sold

d. there will be no effect on the market price or quantity sold